Minister supports Pertamina's proposal to become Cepu operator

State Minister of State Enterprises Sugiharto has expressed strong support to state owned oil and gas company Pertamina's intention to become the operator of the Cepu oil block.

Speaking to reporters on Thursday, Sugiharto said that Pertamina's proposal in the joint operation of the Cepu field with ExxonMobil Indonesia was quite logic and fair because both companies had the same opportunity to act as the operator of the oil block.

"We hope Pertamina and ExxonMobil will soon return to the negotiation table and settle their differences amicably," he said.

Negotiations between Pertamina and its partner ExxonMobil Indonesia over the operation of the lucrative Cepu oil block in East Java have been stalled as both companies demand to become the operator of the oil block.

Pertamina has proposed to act as the operator within the first five years of the oil block operation. But Exxon rejected the proposal and demanded to become the operator from the beginning until the end of the contract, he added.

The government signed the new contract for the development of the Cepu oil block with its operators Pertamina and ExxonMobil Indonesia recently after a long process of negotiations.

Under the new agreement, Pertamina and ExxonMobil will have participating interest of 45 percent in the Cepu oil block, each. The other 10 percent will be allocated to the local government which oversees the territory where the oil block is located.

ExxonMobil formerly operated the Cepu oil block under technical assistance contract with Pertamina. The contract would end in 2010 but the oil giant demanded the earlier extension of the contract for the certainty of its investment in the oil field for another 20 years. (dino)